Mubadala Investment, the Abu Dhabi sovereign wealth fund, is weighing the divestment of loss-making insurtech company Wefox Holding to UK-based Ardonagh Group, reported Bloomberg, citing sources.
This move has sparked opposition from the Berlin-based insurtech start-up’s founders.
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According to the report, Mubadala has informed Wefox shareholders of a potential offer from Ardonagh that would value the company at up to €550m.
Wefox, which was valued at $4.5bn in a Mubadala-led funding round two years ago, has faced significant losses.
The insurtech company reported more than €100m in losses last year and anticipates up to €70m in additional capital requirements through the end of the current year.
This financial situation was detailed in a Mubadala presentation to key shareholders including Chrysalis Investments and Target Global, the publication said.
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By GlobalDataWefox founders and some early investors are pushing back against the proposed sale to Ardonagh, fearing the loss of their entire investment, the sources said.
They suggest a new funding round from existing investors as an alternative.
Chrysalis and Target have shown support for the founders’ alternative financing plan, the sources added.
Chrysalis is preparing a term sheet for a €50m funding round, contributing €15m itself.
Mubadala, Wefox, Ardonagh, Target and Chrysalis representatives declined to comment on these developments.
The sale suggested by Mubadala would divide Wefox into two entities.
Ardonagh would acquire the company’s core operations, while a new company would be formed to house Wefox’s technology platform and Swiss business, owned by early investors and shareholders.
The proposed plan poses a high risk for early shareholders, who could lose their entire investment unless the new company becomes highly profitable.
However, recent investors from the 2022 funding round could potentially double their investment due to liquidation preferences.
An extraordinary meeting of Wefox’s shareholders is scheduled on 28 June, where the sale proposal and the re-election of CEO Mark Hartigan and board member Helen Heslop will be discussed.
